Unique business model for freelance employment

Question

I've thought of a new business model for programmers to work without the need of unnecessary expense on the employer's side. Its like freelancing, but different.

Basically a programmer works:

• In his own home/home office, using his own computer(s), not needing a company-owned office / floor / computers.
• By taking assignments on a personal basis from the employer, not crowdsourcing where an employer doesn't know the programmer personally
• They get to know each other, personally and adjust for needs, not offshore-outsourcing where whole companies are employed
• The main factor here, is that payments are made when the programmer sends back a working module (a small part of a program, not whole apps/sites/features)
• And its an informal approach so stiff contracts are not wanted to be perfectly drafted, abided by -- easier on both parties.

So my questions are:

• Would this be a good idea / realistic / believable / trustworthy enough for expert programmers to get in contact and make deals with me?
• Which communities can I post such requests on? I'm typically looking for experts that can do small jobs, quickly. (LinkedIn?, facebook?)
• Are there existing sites or online services (that take a commision!) that deal exactly (or can deal) with such a freelancing model?
• What sort of legal agreements or contracts are necessary and would they be good? why?, Any available samples? -- So both parties trust each other
• How can I organize the payments in a trustworthy manner? PayPal? I've heard there are certain money-transfer websites that are known to be used by scamsters -- I'd like to avoid those!
• Are there similar known models that might work better?

Answer 1

I can imagine all the legal battles for all the thousands of modules written by different freelancers because of different opinions about "working" (as in "wokring module"). I think the overhead of this would be ugly. If an inhouse developer checks something in, it gets tested and verified and if somebody says its not "working" the developer fixes it. With freelancers you have more trouble.

I believe it works only with larger "modules" like complete libraries or even complete programs.

Answer 2

It's called Rent A Coder.com.

Answer 3

The advantage of having programmers on staff is that they:

• build up knowledge of the businesss;
• developer a relationship with the employer;
• have no communication issues (as opposed to outsourcing);
• are relatively cheap compared to consultants/contractors. The real advantage of contractors is that you can get rid of them more easily when you no longer have the need for them (plus there are some accounting differences);
• are accountable; and
• are internal.

The last point is an important one. Basically as soon as you involve a third party in software development you then introduce inefficiencies in the form of:

• the time and cost to develop a specification;
• legal costs on both sides in establishing a contract;
• processes to deal with acceptance, defect management and support;
• a danger of the relationship turning adversarial rather than cooperative since ultimately any consultancy is out for themselves (and rightly so);
• loss of control over who is doing the work.

These costs and barriers are significant so its only justifiable in one of two circumstances, in my experience:

• the project is so large that the manpower boost required can't be reasonably justified in terms of traditional employment; or
• the project is so small that full-time employees won't be required on an ongoing basis and/or the costs of employment--while otherwise cheap--become a major factor.

Your model isn't much different to rentacoder minus the crowdsourcing. The big sticking point as I see it is the payment on delivery. Who verifies it? Who arbitrates a dispute? This adds significant risk to the developer and thus increases the cost to the employer (and rightly so).

If you look at something like rentacoder you see its nearly all small stuff that its not worth getting a contractor in for (those jobs that are jobs and not homework anyway).

My honest opinion is that I don't see a lot in this.

Answer 4

Any time you move risk around in a relationship you have to consider carefully what is happening. You seem to be moving all the risk towards the occasionally and unpredictably employed programmers - how are they going to react in a way that threatens your business model?

What incentive do you give people to prioritise your work over someone giving them more consistent or larger pieces of work?

Who bears all the risk for the software not working? Modules might work perfectly within the limit of specifications and a system still fails.

Unless you have a lot of experiencing managing software development teams, I wouldn't even consider starting such a business. Consider just how competitive the market is between the existing freelancing sites and how they have evolved and fine-tuned their business models to cope. Do you really think you've come up with something they somehow missed?